Henry Kravis, the high priest of private equity
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New Delhi: Henry Kravis, the boss of private equity pioneer KKR & Co. walks into the slightly cramped meeting room of the Vigyan Bhawan with a stride that belies his 73 years and his diminutive build. Sporting a conservative grey suit with a stylish pocket square, the man who is effectively the CEO to 129 CEOs of KKR’s portfolio companies, kicks off the proceedings by delivering a concise insight into what’s happening in the US and closes on the hour by talking about India’s narrow credit market and the lack of depth in its equity markets, both of which have restricted the financing options for small and medium enterprises.
Vigyan Bhawan on Motilal Nehru Road in New Delhi’s central district is an odd choice for the meeting. In the past it was the venue for dull global events like meetings of Non Aligned countries or commonwealth heads of states. That was when the government could not be seen patronizing private hotels. Now most ministers call editors to meals at the best hotels. So this is a real surprise—one of the world’s most successful capitalists with a net worth close to $5 billion who is at the very top of the private enterprise food cycle, now meeting selected journalists at this throwback to India’s socialist era.
Kravis is a contrarian and instead of dwelling on US President Donald Trump’s many gaffes, talks of how he is a business-friendly president who has a big task ahead to deliver on his many promises, including tax reforms and infrastructure development. He is optimistic, if cautious, on the prospects for his country, pointing to the high levels of enthusiasm among US business people but tempers that by accepting growth could be lower than 2% in the coming year. The humour though, trenchant and pointed, is never far away. Despairing on the lack of dialogue between the Democrats and the Republicans he adds that now he’s not sure “if the Republicans are talking to each other” either.
On Europe, he points to the elections in France and Germany as the wild cards that could upset all projections. China, on the other hand, will have to make some tough decisions. It is a country he knows well and it is his next stop after this trip.
On India, as much as on any other subject, he is precise and razor sharp. No surprise that. He is after all an Ashkenazi Jew. Legend and scholarly academic papers have it that Ashkenazi Jews have the highest average IQ of any ethnic group in the world. Says a paper by researchers at University of Utah, “During the 20th century, they made up about 3% of the US population but won 27% of the US Nobel science prizes and 25% of the ACM Turing awards. They account for more than half of world chess champions.”
Coming from that genetic pool you would expect him to be successful and the co-chairman and co-chief executive officer of KKR is among the most successful money managers in the world. The “co” bit is a consequence of sharing the job, the role and the founding of the company with his first cousin George R. Roberts.
Kravis pioneered the private equity business when with two other partners he founded a leveraged buyout company called Kohlberg Kravis Roberts & Co. L.P. (KKR) in 1976. Since then the company has grown—22 offices and over $130 billion of assets under management worldwide. Equally the PE business has transformed from being purely the money bags in spectacular deals to being an active participant in corporate change from within. In fact, KKR’s 100-day plan for the companies it invests in is both dreaded by managers and also emulated widely. Nor is the firm restricted merely to private equity. It offers all manner of financing solutions to companies.
In India since 2009, it has investments of over $8 billion in companies like Bharti Infratel, Aricent, Café Day Enterprises, Dalmia Cement and Gland Pharma. But for a self-confessed Indophile who likes both Indian food as well the country’s temples (Hampi and the Golden Temple in Amritsar are particular favourites), that doesn’t seem like enough. Maybe that’s what he’s here to fix. With some help from India CEO Sanjay Nayar. After Kravis advised Prime Minister Narendra Modi on his first visit to the US on the need for a bankruptcy code, Nayar played a key role in helping the government frame and structure the same.
It marks the evolution of the company from brash upstart in the 1980s memorably dubbed “barbarians at the gate” for its role in the audacious leveraged buy-out of RJR Nabisco, to the high seat of global finance.